Slide 1: Arm technology development accelerated by SoftBank acquisition
Arm Limited is a subsidiary of Arm technology development accelerated by SoftBank acquisition Ian Thornton, Head of Investor Relations Tokyo © 2018 Arm Limited 5 December 2018
Slide 2: Arm update
Arm update • Financial Update • Arm China Update • New approach to investment following SoftBank acquisition • New technologies that will provide basis for future growth – Laptops, servers and automotive – New IoT SaaS business 2 © 2018 Arm Limited
Slide 3: Financial Update
Financial Update 33 ©©Arm 2018 2018 Arm Limited
Slide 4: H1 2018: Royalty
H1 2018: Royalty $350m $300m Consistent 11% CAGR $250m Smartphone growth has slowed $200m IoT is still very low volumes $150m $100m Arm based servers is very encouraging $50m $0m New royalties from new Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 technologies expected first in 2020 and to become meanin
Slide 5: H1 2018: Non-Royalty (Technology Licensing and Software)
H1 2018: Non-Royalty (Technology Licensing and Software) $300m $250m $200m Remains $180m on average $150m Arm China JV bottleneck $100m Revenues from new $50m technologies start to come through in 2019: $0m Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 • New processor roadmap 2015 2016 2017 2018 • New A
Slide 6: H1 2018: Investments and profitability
H1 2018: Investments and profitability Annual FlexPot payments £350m 60% Once per year payment £300m 50% Profitability lower as £250m R&D spend increased 40% £200m Arm expects profitability 30% to be 0% to 10% for next £150m few years. 20% £100m Arm does not wish to go £50m 10% below zero £0m 0% Q1
Slide 7: Arm China JV Update
Arm China JV Update 77 ©©Arm 2018 2018 Arm Limited
Slide 8: Establishing Arm China JV in Fiscal H1 2018
Establishing Arm China JV in Fiscal H1 2018 Building a bigger business; built on strong foundations >150 Licensees 10bn Chips shipped by Chinese partners using Arm processor technology 95% Chinese designed SoC based on x140 Growth in volume shipment by Chinese partners 2006-2017 Arm China will be ab
Slide 9: Establishing Arm China JV in Fiscal H1 2018
Establishing Arm China JV in Fiscal H1 2018 Building a bigger business; built on strong foundations >150 Customers to novate from 341 Employees transferred Arm China JV establishment was initiated in early Q1 2018 and completed at the end Q1 Arm Limited to Arm China to Arm China in Q1 Novation (tran
Slide 10: New approach to investment
New approach to investment 10 ©©Arm 10 2018 2018 Arm Limited
Slide 11: Historic approach for high-performance processors
Historic approach for high-performance processors Arm Partners 11 © 2018 Arm Limited
Slide 12: Historic approach for high-performance processors
Historic approach for high-performance processors Arm Partners Mobile first Mobile Processor Specification Networking Servers / Embedded Automotive 12 © 2018 Arm Limited
Slide 13: New approach for high-performance processors
New approach for high-performance processors Arm Partners End Market Variation Mobile Base Processor End Networking Market Servers / Specification Variation Embedded Automotive End Market Variation 13 © 2018 Arm Limited
Slide 14: New approach for high-performance processors
New approach for high-performance processors Arm Partners End Market Variation Mobile Base Processor End Networking Market Servers / Specification Variation Embedded Automotive End Market Variation 14 © 2018 Arm Limited
Slide 15: New approach to investment
New approach to investment Shared base processor technology Optimised for end markets Base technology for future mobile processor Adds 10%-20% to development costs Higher development costs expected to be covered by higher licensing fees Higher long-term profitability expected from higher future roya
Slide 16: Increased development costs offset by increased revenues
Increased development costs offset by increased revenues Increased License revenues Increased royalty revenues through costs cover costs more deployments and higher percentage -2 -1 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 © 2018 Arm Limited
Slide 17: New roadmaps optimised for specific end markets
New roadmaps optimised for specific end markets 17 ©©Arm 17 2018 2018 Arm Limited
Slide 18: Arm processor roadmap for laptops and computing
Arm processor roadmap for laptops and computing Estimated performance based on SPEC*int2006 Intel*Core i5 U-series • A performance trajectory surpassing Moore’s law Performance Core i5-7300U • Unmatched year-over-year 14nm Core i5-6300U Arm CPU performance gains 14nm Core i5-4300U 22nm 2.5x increase
Slide 19: Each generation brings faster performance and new infrastructure features
Each generation brings faster performance and new infrastructure specific features (© 2018 Arm Limited — 16nm — Cosmos Platform rv (A72, A75) Today 7am — Ares Platform 2019 Snm — Poseidon Platform arm NEOVERSE
Slide 20: 45% cheaper than x86
45% cheaper than x86 20 © 2018 Arm Limited
Slide 21: New business for IoT SaaS
New business for © 2018 Arm Limited IoT SaaS
Slide 22: Arm Pelion IoT Platform: Device-to-data security
Data Arm Pelion IoT Platform Control End-to-end services built on Arm IPG+ISG security framework Applications Ecosystem (App Development Enablement) CDP Asset Tracking Device-to-data security Enterprise + Data Management Services Other Data Pelion Device Management Services Connectivity Management S
Slide 23: Example – How Arm could make money from IoT
Example – How Arm could make money from IoT Semiconductor technology 2x Arm Cortex-M3 Arm Integrated SIM technology 23 © 2018 Arm Limited (Arm iSIM)
Slide 24: Example – How Arm could make money from IoT
Example – How Arm could make money from IoT Connectivity, Device and Data Management Other data sources Control of Recurring Device and IoT devices Data Management Fees OEM Data collected Control of devices from IoT devices Data from devices 24 © 2018 Arm Limited
Slide 25: Arm IoT Services Group (ISG)
Arm IoT Services Group (ISG) Secure and scalable innovation from 800+ Device to Data customers > 30 PB of customer data managed > 2 million records per second ingested 140+ > 300K queries per day Ecosystem partners 55 TB network data flow per month Smart grid technology partnership with KEPKO, the l
Slide 26: Conclusion
Conclusion Arm is executing on its plan to reinvest all revenues back into the business • Annual adjusted EBITDA margin expected to remain in 0-10% range Increased investment has enabled Arm to develop • Develop more technology products • Develop more advanced and valuable technology • Enter new mar
Slide 27: Arm trademarks notice
The Arm trademarks featured in this presentation are registered trademarks or trademarks of Arm Limited (or its subsidiaries) in the US and/or elsewhere. All rights reserved. All other marks featured may be trademarks of their respective owners. www.arm.com/company/policies/trademarks 27 © 2018 Arm